Blunt Wraps Refunds Still Linger in CA
California recently amended its definition of what constitutes a taxable “tobacco product.” California taxes “tobacco products” which was defined as “all forms of cigars, smoking tobacco, chewing tobacco, snuff, and any . . . products made of, or containing at least 50 percent, tobacco.” This meant that certain products, such as blunt wraps, or cigar wraps, could escape the prospect of being subject to these tobacco taxes. We have successfully argued against the taxability of similar products in other states with a broader definition.
California’s new law eliminated the 50% threshold and casts a much wider next in its determination as to whether a product is a tobacco product for tax purposes. The new definition of “tobacco products” provides that “a product containing, made, or derived from tobacco . . . that is intended for human consumption,” will be subject to tax. With the removal of a minimum tobacco composition, any product containing any amount of tobacco that is intended for human consumption can be taxed. This change would seemingly capture blunt wraps and make them taxable.
It seems that it could be reasonably argued that prior to the amendment blunt wraps were not taxable and post amendment they are. While distributors may be subjected to California’s 28% tax on a go forward basis, distributors should hustle to get their refund claims filed as the statute of limitations is ticking.
If you or your company has been paying tax on blunt wraps over the past several years please call for a free consultation.
About the author: Gerald “Jerry” Donnini II is a shareholder of the Law Offices of Moffa, Sutton, & Donnini, P.A. Mr. Donnini concentrates in the area of state and Federal tax matters, with a heavy emphasis on the tobacco, alcohol, motor fuel and related industries. He also handles a myriad of multi-state state and local tax issues. Mr. Donnini is a co-author for CCH’s Expert Treatise Library: State Sales and Use Tax and writes extensively on multi-state tax issues for SalesTaxSupport.com. For more information please call us at 888-966-8216.